For more and more seniors, retirement doesn’t mean a debt-free life of leisure. An increasing number of Americans aged 65 and older are declaring bankruptcy. According to a recent study by John Pottow, professor of law at the University of Michigan Law School, those aged 65 and older are the "fastest-growing age demographic," in filing bankruptcy according to Pottow’s study.

Why? Credit cards.

Increasing medical expenses and the lagging stock market have prompted many seniors to live beyond their means, Reuters reported.

Bankruptcy Institute, U.S. consumer bankruptcies increased 9% nationwide in 2010 from the previous year. High rates of unemployment coupled with soaring credit card debt and a sluggish housing market have been cited as the primary contributing factors for the record bankruptcy rates across the country. As the economy slowly begins to recover, the overall number of bankruptcy filings in 2011 is expected to decrease. But for many individuals, the recovery may not come fast enough and bankruptcy may be their best option for returning to financial stability..

Chapter 7 of the Bankruptcy Code is available to both individual and business debtors. Its purpose is to achieve a fair distribution to creditors of the debtor’s available non-exempt property. Unsecured debts not reaffirmed are discharged, providing a fresh financial start.Two-thirds of Americans who filed for bankruptcy said credit cards were the key reason for their financial problems. Unfortunately, besides having more credit card debt compared with younger bankruptcy filers, senior citizens have more plastic in their wallets. In addition, they are living on a fixed income and maybe a small pension.

They end up using credit cards to supplement that income to meet unanticipated expenses or they end up with a lot of medical debt.

On top of that, seniors have seen their stock portfolios hit hard by the lagging stock market and even the recent run up has not recouped losses..

In addition, whether or not a person declares Chapter 7 (which involves the liquidation of one’s assets) or Chapter 13 (which allows debt restructuring) bankruptcy can be a significant factor in determining what one’s lifestyle will be. "If you have to file for Chapter 7 bankruptcy, you may be able to find affordable housing that allows you to just get by," says Rodi. "Chapter 13 lets you keep your house and doesn’t touch your retirement savings."

Regardless, filing for bankruptcy is very stressful for anyone. "A lot of our clients in that post-retirement age have a hard time coming to grips with their situation," Osterland says. "It’s very emotional for them. We try to focus on the future and see if this debt can be lifted off their shoulders." In any case filing for bankruptcy is very stressful for anyone and many seniors need help to handle the situation.

"A lot of our clients in that post-retirement age have a hard time coming to grips with their situation," said Osterland. "It's very emotional for them. We try to focus on the future and see if this debt can be lifted off their shoulders."
Is it? Study after study shows that more elders are living with heavy credit card debt, regularly swiping cards to pay for things like gas and groceries. And as the balances pile up, the elderly cope in a number of ways. Some elderly debtors are trapped in limbo, too proud to ask for help but too strapped to pay off the debt.

No wonder growing numbers of the elderly have or want jobs. A report from the Sloan Center on Aging and Work at Boston College found that 30 percent of unemployed workers over age 55 have more credit card debt than retirement savings; 41 percent have as much. The situation for employed older workers is less grim, but not by much: A study by researchers at Rutgers University found that 22 percent of older workers, the vast majority of them employed, reported increased credit card debt, and 12 percent said they had missed a credit card payment because of the economic downturn. Experts say many older Americans face the very real possibility of starting retirement in the red.

"They don’t have anything to fall back on," said Carl Van Horn, a public policy professor at Rutgers University and co-author of the study. "They can’t sell their house, their retirement savings are nonexistent, they owe all this money in credit card debt — and that’s a bleak future."

The growing reliance on plastic has driven the average credit card debt for people over 65 to $10,235, according to a July 2009 study by Demos, a public policy research organization in New York.

José Garcia, associate director of research and policy at Demos, said the increase in the number of older Americans getting new credit cards outpaces that of any other age group.

"I sat down and realized how much I had every month, which is nothing," said Mrs. Brady.

Bankruptcy might make sense in some cases. But the elderly are "a segment of the population that would be reluctant to frivolously file bankruptcyBut this generation is also proud and hesitant to ask for help.

Mrs. Linfield encourages adult children and family members to get involved, ascertain what is going on financially and help parents access services like veteran pension benefits if necessary.

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